Pittsburgh’s propensity for comebacks makes for good long-term real estate investment, according to a report by an international property development company.
London-based Grosvenor Group has rated Pittsburgh as the fifth most resilient city in the world, making it an attractive option for such investment.
In securing the ranking, the ’Burgh beat out such notable cities as Boston, New York, San Francisco, London, Paris, Stockholm and Hong Kong. Only one U.S. city — Chicago — finished ahead of it. Three Canadian cities — Toronto, Vancouver and Calgary — topped the list.
The report by the 300-year-old property development company ranked cities based on climate; environment; resources; infrastructure; community; governance; planning systems; institutions; and technical, learning and funding structures.
In compiling the ratings, Grosvenor stated that it wanted to move beyond traditional real estate barometers such as projected vacancy rates and rental growth estimates.
“These have relatively little meaning in the long term, and are particularly unhelpful in a world where the basic patterns of the last millennium are shifting. Successful real estate projects depend on the long-term stability and prosperity of cities,” it said.
Jeffrey Ackerman, managing director of the CBRE real estate firm in Pittsburgh, said that Grosvenor is a highly regarded pension fund adviser and that its report could carry clout among those looking to invest in Pittsburgh.
“It is significant since Pittsburgh has proven to be a city that holds values and fared well during the recent recession,” he said. “Many cities experienced a weak commercial real estate market during the recession with weak demand, layoffs, rising vacancies, falling rental rates and lower values. We were a little more recession proof with PNC’s growth, strong meds and eds, and the growing demand in the oil and gas industry.”
Mayor Bill Peduto, in announcing the Grosvenor findings, said, “The rest of the world is responding to the great things happening in Pittsburgh and my administration’s promotion of sustainable growth policies to make our city a global leader.”
In recent years, the city has seen an increase in out-of-town investment, particularly Downtown, with companies like Raleigh, N.C.-based Highwoods Properties, PMC Property Group of Philadelphia, and Chicago-based M&J Wilkow purchasing real estate.
“It’s certainly been clear over the last couple of years that money from outside the city has been interested in the city,” said Peter Sukernek, vice president and general manager of Howard Hanna Commercial Real Estate Services. “I can see where someone would say we have a good long-term outlook for continued growth and that increased growth means increased value in real estate.”
The report ranked Pittsburgh as the ninth least vulnerable of the top 50 cities and the 10th most adaptive. Combined, they led to the fifth place rating in resilience.
Richard Barkham, Grosvenor Group’s research director, said the study “provides us with a powerful tool to use when looking at the risks and opportunities of long-term real estate investment in cities around the world.”
First Published: April 14, 2014, 5:06 p.m.
Updated: April 15, 2014, 3:52 a.m.
